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Introduction to the_chinese_streaming_market

  1. And how it differs to the West An introduction to
  2. 1. China’s Streaming Ecosystem 04 2. Most Popular Games 12 3. China’s Top Game Streamers 16
  3. © Newzoo 2019 Navigating and understanding China’s unique streaming ecosystem 3 Tianyi Gu China Market Analyst China’s streaming ecosystem is a far cry from what’s going on in the West, in terms of content, monetization, and how the audience interacts with the content. While platforms such as Twitch and YouTube generate the majority of their revenues through subscriptions, China’s biggest platforms, including YY Live, Huya, and Douyu, predominantly make money from user donations to streamers. Streamers take home around 30-40% of these donations, with platforms and streaming guilds receiving the rest. Streaming guilds are essentially celebrity management companies that recruit, train, and promote signed streamers. Viewers in China are more willing to spend big on general entertainment content than on games, so platforms such as Huyu, Douyu, and Tencent Egame are experimenting with new promotion strategies to put their streamers in the spotlight. This has resulted in a slew of reality TV shows aiming to bridge the gap between game streaming, esports, and general entertainment, with some promising results. China is a mobile-first country and this is reflected in its game-streaming market. The collective nature of traditional Chinese culture also means that its viewers engage with content differently to Western viewers. Interactions between viewers and the streamers are far more prominent in China, thanks to innovative platform features such as bullet chats. Chinese streaming platforms are also generally less toxic toward women, as gender balance is very important in Chinese culture. In fact, there is less toxicity all round, as gaming and streaming are considered social activities in China. In this whitepaper, we deep dive into the Chinese streaming ecosystem, zooming in on its unique features, its most popular titles and streamers, and how it differs to the Western streaming market. The average user donations received by a top 100 streamer in 2018 (before platforms/streaming guilds took their cut). Note: For this whitepaper, we used the year-end exchange rate of 1 USD = 6.8755 CNY.
  5. © Newzoo 2019 of Huya’s revenues in 2018 came from user donations. of the top 100 Chinese streamers in 2018 were non-game streamers.
  6. © Newzoo 2019 How platforms monetize in China differs from the West 6 Entertainment content on live-streaming platforms is far more popular in China than in the West. In fact, seven of 2018’s top 10 Chinese streaming sites focus on general entertainment, including singing and dance. In the West, however, most of the top platforms—like Twitch and YouTube— are focused on games for live streaming. Streaming platforms in China also feature different monetization strategies compared to the West. Twitch and YouTube generate most of their revenues via subscriptions and advertising, while Chinese platforms monetize by taking a cut of virtual-item sales, which are often used as donations to streamers. In 2018, 95% of YY Live’s and Huya’s revenues came from the sale of virtual items. China’s mobile-first culture is also a factor, with many Chinese streaming sites being optimized for smaller screens. Four of China’s top 10 streaming sites are mobile first. China’s game-streaming market first exploded in 2013 and 2014 when platforms like Douyu and Huya launched. These platforms became the market leaders by pouring capital into attracting top streamers. Both platforms signed plenty of million-dollar exclusivity deals with top streamers. The initial craze saw large amounts of money flowing into the market; yet, something had to give. Eventually, the bubble burst. PandaTV, China’s third-largest game-streaming platform in 2018, filed for bankruptcy in March 2019. Up until this point, the company struggled for two years and ultimately failed to secure investment. Today, the Chinese game-streaming market is more stable, dominated by Huya and Douyu. Interestingly, Tencent owns a stake in both these platforms. These top platforms have shifted their focus to original content creation and buying third-party media rights. TOP 10 STREAMING PLATFORMS IN CHINA By user donations | 2018 # STREAMING PLATFORM CONTENT FOCUS MAIN PLATFRORM USER DONATIONS 1 YY Live YY直播 Entertainment PC $1,518M* 2 Huya 虎牙 Games PC $646M* 3 Huoshan 火山直播 Entertainment Mobile $542M 4 Inke 映客 Entertainment Mobile $458M 5 Douyu 斗鱼 Games PC $433M 6 Huajiao 花椒 Entertainment Mobile $217M 7 Kuaishou 快手 Entertainment Mobile $169M 8 PandaTV 熊猫直播 Games PC $167M 9 Fanxing 繁星直播 Entertainment PC $134M 10 KKTV KK直播 Entertainment PC $116M Source: Newzoo in partnership with * Source: public financials.
  7. © Newzoo 2019 Entertainment plays a central role when it comes to platforms promoting game streamers in China 7Source: Newzoo in partnership with Owing to the Chinese audience’s willingness to spend big on general entertainment, non-game streamers earn far more via donations than game streamers. For example, 87 of the top 100 in 2018 streamers (by donations) were non- game streamers. On average, a top 100 streamer received $3.66 million in donations in 2018 (before guilds and platforms took a cut), with game streamers averaging $3.57 million and non-game streamers averaging $3.67 million. Looking at the platforms used by the top 100 streamers, 45 streamed via YY Live, 17 via Huya, and 11 via Douyu. In a bid to increase revenues from donations, game- streaming platforms are now innovating their streamer- promotion strategies. Huya, Douyu, and Tencent Egame, for example, have each produced an original variety show starring game streamers. Even Riot Games, the publisher behind League of Legends, is partnering with Tencent, LoL Pro League, and Douyu for the “Go! Heroes’’, which will show three celebrities setting up professional LoL teams and inviting top streamers to compete against one another. Similarly, Huya’s “Godlie’’ features the platform’s top game streamers playing the boardgame Werewolf. Meanwhile, Tencent organizes the “Egame 202’’ talent show, which gives contestants the chance to win a streaming partnership with the platform. This kind of shoulder content is great for reaching new demographics. of the top 100 Chinese streamers by donations in 2018 were non-game streamers. The average user donations received by a top 100 streamers in 2018.
  8. © Newzoo 2019 Huya and Douyu compete for market leader established the first gaming- specific streaming platform, YY Gaming, which launched back in 2012. In 2014, the platform became so popular that it spun off as an independent entity: Huya. In May 2018, Huya became the first public Chinese game-streaming platform. Huya reported $678.3 million in revenues in 2018 (+113.4% year on year), and 116.6 million MAU (+34.5% year on year) at the end of 2018. Popular Asian esports leagues such as LPL, LCK, and KPL have all been broadcast on Huya. Douyu was the first game-streaming platform to pour a huge amount of capital into signing top streamers. In just two years, this strategy helped the platform overtake Huya as the largest game-streaming platform in China. While other platforms catching up, Douyu had already shifted its focus to content creation, aiming to cover a broader spectrum of content. Fast forward to today, and the platform now actively organizes first-party esports tournaments. Douyu, however, failed to capitalize on China’s mobile esports boom between 2016 and 2017, meaning Huya was able to catch up. HUYA Founded In: Nov 2014 HQ: Guangzhou, China DOUYU Founded In: Jan 2014 HQ: Wuhan, China Game streaming platform in China by user donations in 2018 Game streaming platform in China by user donations in 2018 8Source: Newzoo in partnership with
  10. © Newzoo 2019 Severe competition makes it difficult for streamers to succeed without a guild 10 TOP 10 STREAMER GUILDS IN CHINA By business value* | As of Dec 31, 2018 # STREAMER GUILDS CONTENT FOCUS BUSINESS VALUE DONATIONS IN 2018 ACTIVE STREAMERS 1 Bgoose 大鹅文化 (Mobile) Games $173M $21M 1,378 2 Aipai 爱拍原创 Games $133M $34M 442 3 xRock 炫石互娱 Games $128M $17M 878 4 YW Media 渝万传媒 Games $107M $27M 4,870 5 Wudi Media 吉林舞帝传媒 Entertain- ment $105M $72M 246 6 China Blue 中国蓝娱乐 Entertain- ment $101M $78M 685 7 Famulei 伐木累 Games $78M $15M 40 8 Elephant EL-小象互娱 Games $73M $19M 863 9 Yujia 娱加 Combined $71M $40M 213 10 AO 傲之最 Games $68M $19M 515 * The business value of a guild is the aggregation of business values of individual streamers in the guild. The business value of a streamer is mainly estimated based on donations, advertising income, and proportion of paying users among his/her followers. Source: Newzoo in partnership with Streamer guilds in China are similar to celebrity management companies; they recruit, train, and promote signed streamers, earning revenues by taking a cut of the streamers’ earnings. Guilds help streamers build stronger connections with their followers, ultimately resulting in more revenues from user donations. Every party benefits: the streamers, the platforms, and, of course, the guilds themselves. China’s unique ecosystem of platforms guilds, streamers, and viewers fosters the development of live-streaming communities, helping platforms and streamers boost user engagement and retention rates. China’s streamers are not obligated to join a guild, however. While independent streamers benefit from keeping 100% of their earnings, they often lack the resources, assets, and reach necessary to grow a big community. With hundreds of streaming platforms and countless streamers, it is even more difficult for independent streamers to stand out—especially if they are newcomers. Despite the fact that entertainment content is more popular than game content in China, its gaming-focused guilds are generally bigger. Many companies are vying for a piece of the entertainment pie, meaning competition between entertainment-focused guilds is fiercer. What’s more, game-focused guilds tend to represent more streamers and are spread across several platforms. This results in higher valuations. China’s fastest-growing guild by far is Bgoose Culture, mostly due to the company quickly adapting to the mobile esports boom. It now represents many of the top Chinese streamers for Honor of Kings, PUBG Mobile, and CrossFire Mobile—three of China’s most popular mobile esports titles. .
  11. © Newzoo 2019 This is very important in China from a cultural perspective 11 Screenshot of bullet chats when the Chinese team Invictus Gaming won the 2018 League of Legends World Championship in November 2018. Source: Bilibili. bullet chats were posted on official channels of the 2018 LoL World Championship during the elimination stage. Source: Newzoo in partnership with TOP 3 STREAMING PLATFORMS IN CHINA By total number of bullet chats | 2018 1. 2. 3. 10 billion 8 billion 6 billion Bullet chats are user comments that move across users’ screens like bullets when using a streaming platform. These comments are just one way for users to interact with streamers. The concept originated from Japanese video-sharing platform Niconico. In China, AcFun was the first platform to use the feature, but they were popularized in the market by leading anime-streaming site Bilibili. Bullet chats are now so popular in China that almost every site now features them, including iQiyi and Youku, which are essentially China’s versions of Netflix and YouTube, respectively. Chinese streaming platforms monetize bullet chats by giving users the chance to buy additional features, such as different text colors. Many find bullet chats annoying at first, as they can become so active that they cover the video itself. However, they help Chinese viewers feel more connected to other viewers. This fits in with traditional Chinese culture, which values collectivism and social connection. Simply put, bullet chats have transformed China’s live-streaming viewing experience by adding a new level of interaction. Although China’s entertainment-streaming platforms generate more revenues via donations, game-streaming platforms have far higher user engagement. In 2018, Huya boasted the most bullet chats in the Chinese streaming ecosystem, with 10 billion. What’s more, viewers of game content tend to be outspoken while discussing streamers’ tactics and techniques. Esports content, in particular, evokes a strong emotional response from viewers—especially if their favorite teams or players are involved. For example, when a Chinese team made it to the elimination stage of the 2018 League of Legends World Championship, more than 9 million bullet chats were shared on the competition’s official Douyu and Huya channels.
  13. © Newzoo 2019 of the most streamed games in China were mobile games in 2018, vs. none on Twitch.
  14. © Newzoo 2019 In 2018, 75% of the of streams generated by the top 10 games came from mobile titles 14Source: Newzoo in partnership with TOP 10 GAMES ACROSS CHINESE STREAMING PLATFORMS By number of streams | 2018 # GAME PLATFORM PUBLISHER NUMBER OF STREAMS* 1 Honor of Kings Mobile Tencent 42.0M 2 PUBG Mobile Mobile Tencent 20.7M 3 PUBG PC Tencent 10.0M 4 League of Legends PC Tencent 9.6M 5 CrossFire Mobile Mobile Tencent 4.5M 6 PUBG - Full Ahead Mobile Tencent 3.6M 7 CrossFire PC Tencent 3.5M 8 Knives Out Mobile NetEase 3.1M 9 QQ Speed Mobile Mobile Tencent 2.9M 10 Dungeon & Fighter PC Tencent 2.2M 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. TOP 10 GAMES ON TWITCH IN 2018 Mobile gaming is massive in China, with 70% of the online population having played mobile games in 2018. Six out of the top 10 most-streamed games in China were mobile games across all streaming platforms. What’s more, three-quarters of all streams for the top 10 games were mobile titles. In contrast, there were no mobile games on Twitch’s top 10 most-streamed titles for 2018. Naturally, games that are popular on Twitch are not necessarily big in China. Fortnite, for example, was Twitch’s most-streamed title in 2018 with 58 million streams. Yet, it was not popular at all in China, where PUBG was far more prevalent. Together, PUBG, PUBG Mobile, and PUBG – Full Ahead totaled 34 million streams in China in 2018, compared to 11 million on Twitch. Looking at the Twitch top 10, there is far more diversity when it comes to IP. The top 10 for China’s streaming platforms is much less varied; most titles are mobile adaptations of successful PC franchises like PUBG and CrossFire. Almost every top PC game in China has been adapted to mobile. These mobile versions often grow so big that they eclipse the original title. The two mobile PUBG titles attracted more than 24 million streams, compared to the original PC version’s 10 million. Similarly, China’s top game (by streams) is MOBA Honor of Kings (known as Arena of Valor in the West). It is widely seen as the mobile version of League of Legends. Honor of Kings had 42 million streams across all China’s streaming platforms in 2018—four times as many as League of Legends. By number of streams * A stream is any session when a streamer starts broadcasting live.
  15. © Newzoo 2019 Tencent leads in the Chinese games, esports, and streaming markets 15Source: Newzoo in partnership with GAMES MARJOR PROFESSIONAL LEAGUES STREAMING PLATFORMS of the top 10 streamed games in 2018 were published by Tencent in China. FULLY OWNED INVESTMENTS TENCENT EGAME: Founded in 2016, Tencent Egame has become one of the most popular streaming platforms in China thanks to the media rights it has secured via Tencent, China's largest publisher. Tencent Egame broadcasts esports content for China’s most popular games, including League of Legends, Honor of Kings, and PUBG. DOUYU: Tencent invested $630 million in Douyu in March 2018, giving the platform media rights to major Tencent-owned game and esports content. HUYA: On the same day as its Douyu investment, Tencent also invested $462 million in Huya. Between the second and third anniversary of the deal’s closing date, Tencent can purchase additional Huya shares at a fair market price. This gives Tencent a chance to have a majority stake in the company.
  17. © Newzoo 2019 Average earnings of the top 10 Chinese game streamers from donations in 2018 vs. $5,708 per capita disposable income in rural China*. Donations to the #1 Chinese streamer in 2018 — almost as much as Ninja is estimated to earn via Twitch subscriptions. * Source: National Bureau of Statistics.
  18. © Newzoo 2019 This is almost as much as Ninja is estimated to earn from his Twitch subscriptions 18Source: Newzoo in partnership with TOP 10 GAME STREAMERS IN CHINA By user donations | 2018 # STREAMER PLATFORM GAME FOCUSED DONA- TIONS 1 XuXuBaoBao 旭旭宝宝 Douyu Dungeon & Fighter $10M 2 LongMing 龙溟 NetEase CC Fantasy Westward Journey PC $5M 3 A’Leng 阿冷 Douyu League of Legends $3M 4 TongNanZi 再续前缘 童男子 NetEase CC Fantasy Westward Journey PC $3M 5 KangZou 抗揍 NetEase CC Fantasy Westward Journey PC $3M 6 FengTiMo 冯提莫 Douyu League of Legends $3M 7 CiKe 刺客 NetEase CC Fantasy Westward Journey PC $3M 8 FeiLingXue 妃凌雪 Douyu PUBG $3M 9 yyfyyf Douyu Dota 2 $3M 10 pigff Douyu PUBG $3M * Data as of March 25, 2019. Game streamers in the top 10 generated an average of $4 million in donations in 2018. The streamers usually receive a 30-40% cut of these donations, with the platform/streaming guilds receiving the rest. This means that the top 10 streamers earned between $1.2 million and $1.6 million from donations in 2018. In comparison, the yearly disposable income in rural China in 2018 was just $5,708, according to the National Bureau of Statistics. China’s most popular game streamer is undoubtedly XuXuBaoBao. In 2018 alone, XuXuBaoBao generated more than $10 million in user donations (before guilds and platforms took a cut), which approaches our estimate of Ninja’s earnings from Twitch subscribers (before Twitch took a cut). Like many streamers, this success comes from a combination of his game skills, humor, and engagement with the audience. XuXuBaoBao mainly streams Tencent’s Dungeon & Fighter via Douyu. This title was Tencent’s first big hit in the Chinese games market back in 2007. XuXuBaoBao is the title’s only streaming superstar. The same cannot be said for other big titles like League of Legends and PUBG, which are streamed by multiple top streamers. In 2018, XuXuBaoBao accounted for almost 30% of all donations to Dungeon & Fighter streamers. Notably, streamers of NetEase’s Fantasy Westward Journey attracted a lot of donations in 2018. Despite launching in 2003, the turn-based MMOPRG remains one of China’s most popular PC games. Players of the game are known for their big spending power and are even willing to pay to watch.
  19. © Newzoo 2019 NUMBER OF STREAMERS SHARE OF DONATIONS 5/10 71% 3/10 44% 3/10 33% 1/10 8% AVERAGE DONATIONS RECEIVED $2.1M $2.1M $0.6M $0.9M In general, gaming and streaming are a lot less toxic for women in China than in the West 19Source: Newzoo in partnership with GENDER SPLIT AMONG TOP 10 STREAMERS By user donations | 2018 SHARE OF DONATIONS NUMBER OF STREAMERS 5/10 29% 7/10 56% 7/10 67% 9/10 92% AVERAGE DONATIONS RECEIVED $0.9M $1.2M 0.6M $1.1M Female streamers are far more popular in China than they are in the West. Of China’s most popular games, League of Legends has the most female streamers in the top 10 (by user donations). In fact, half of 2018’s top 10 League of Legends streamers in China were women, including the top four. Together, these five female streamers accounted for 71% of the user donations received by the top 10, with an average of $2.1 million per person. In contrast, the top five male streamers received an average of $0.9 million. Despite the fact that both PUBG and PUBG Mobile had fewer female streamers in the top 10 in 2018, women still received more user donations than men. Honor of Kings was the only game in which male streamers dominated in terms of donations. While the West’s streaming ecosystem is often toxic toward women, the Chinese market is more equal. The reasons for this are twofold. Firstly, gaming and streaming are considered social activities in China, and gender balance is important. Secondly, China’s streaming business is more focused on entertainment, so viewers tend to be less outspoken and more inclusive. WOMEN MEN
  20. © Newzoo 2019 They operate side businesses as well 20Source: Newzoo in partnership with Many big Chinese streamers have introduced their own guilds in order to secure a higher share of their earnings. In August 2017, China’s #1 game streamer, XuXuBaoBao, set up the streamer guild xRock Entertainment, which grew to become the third-largest guild in 2018. SETTING UP STREAMER GUILDS Streamers known for their advanced gaming skills have also set up their own professional esports teams: 17 Gaming and Four Angry Men, two professional PUBG teams, for example. 17shou, the streamer who started 17 Gaming, is even one of the players on the team. ENTERING THE PROFESSIONAL ESPORTS SCENE Cyber cafés are popular in China, as they provide high-quality hardware, peripherals, and high-speed Internet connections. Top streamers now commonly own cyber café groups. Physical venues for the board game Werewolf are also popular. JY, the biggest Werewolf streamer, owns several Werewolf gaming centers across China. CREATING OFFLINE GAMING EXPERIENCES Like in the West, Chinese streamers are keen to develop a unique brand of merchandise and peripherals. Many of the top female League of Legends streamers have opened their own web shops selling gaming peripherals on Alibaba’s Taobao and These well-known streamers have attracted a lot of traffic to these sites. INVESTING IN MERCHANDISES & PERIPHERALS
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  23. And how it differs to the West An introduction to